Upper Volta - Urban Development Project : Credit 0766 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 766 UV Development Credit Agreement (Urban Development Project) between REPUBLIC OF UPPER VOLTA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated March 16, 1978 CREDIT NUMBER 766 UV DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated March 16, 1978, between the REPUBLIC OF UPPER VOLTA (hereinafter called the Borrower) and the INTERNA- TIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Associa- tion). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project, described in Schedule 2 to this Agreement, by extending the Credit as hereinafter provided; (B) by letters addressed by the Association to the Minister of Finance of the Borrower on July 9, 1976 and July 7, 1977 the Association grantec advances to the Borrower totalling $330,000 for the preparation of the Project described in Schedule 2 to this Agreement; (C) pursuant to the terms of said advances the aggregate amount thereof is to be refunded to the Association out of the proceeds of the Credit provided for in this Agreement; and (D) the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: - 2 - (a) "Ministry" means the Ministry of the Borrower respon- sible for Public Works, Transporc and Town Planning; (b) "ONE" means the National Water Office, a public estab- lishment of the Borrower established and operating under Decree No. 77-140 PRES.DR. of the Borrower dated April 26, 1977; (c) "Municipalities" means the Municipalities of Ouagadougou and of Bobo-Dioulasso; (d) "FONASEN" means the National Fund for Land Reclamation and Maintenance, a public enterprise of the Borrower established and operating under Decree No. 77-369/PRES/MF. dated September, 1977, as modified by Decree No. 78-017/PRES/DR of January 17, 1978; (e) "Financing Agreements" means the agreements to be entered into between the Borrower and the Municipalities, ONE and FONASEN pursuant to Section 3.06 (a) of this Agreement, as the same may be amended from time to time, and such term includes all Schedules to such Agreements; (f) "Special Account" means the account referred to in Section 2.02 (b) of this Agreement; and (g) "BND" means the National Development Bank of the Borrower. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to eight million two hundred thousand dollars ($8,200,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of this Section and of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Association, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. -3- (b) The Borrower shall, for the purposes of the Project, open a Special Account in its Treasury on terms and conditions satisfactory to the Association. Disbursements from the Special Account shall be made exclusively to finance the costs of goods and services required to carry out the Project. (c) The Association shall, promptly after the Effective Date, withdraw on behalf of the Borrower from the Credit Account and deposit in the Special Account an initial amount in the cur- rency of the Borrower not exceeding $400,000 equivalent and shall thereafter, at the request of the Borrower, further withdraw from the Credit Account and deposit in the Special Account such amounts as shall be required to reimburse the Borrower for payments made out of the Special Account for expenditures for the Project eligi- ble for financing under the Development Credit Agreement, but only to the extent that the amount of any such deposit, together with any amount already on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of $400,000. (d) The Borrower shall furnish to the Association in respect of each payment out of the Special Account such documents and other evidence as the Association shall reasonably request, show- ing that the payment was made on account of the reasonable cost of goods or services required for the Project and to be financed out of the proceeds of the Credit. (e) If the Association shall have determined that any pay- ment out of the Special Account: (i) was made for any expenditure not eligible for financing by withdrawal from the Credit Account; or (ii) was not justified by the evidence furnished pursuant to paragraph (d) of this Section, the Borrower shall, promptly upon notice from the Association and prior to any further deposit in the Special Account by the Association, deposit in the Special Account an amount equal to the amount of such payment. (f) Notwithstanding the provisions of paragraph (c) of this Section, no further deposit in the Special Account shall be made when the Association shall have determined that all further with- drawals can be made under paragraph (a) of this Section or when the total amount withdrawn from the Credit Account shall have reached the equivalent of $7,800,000, whichever shall be sooner. Withdrawal of the remaining amount of the Credit shall follow procedures agreed between the Borrower and the Association. -4- (g) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit Account and pay to itself the amount required to repay the principal amounts of the advances referred to in the preamble to this Agreement withdrawn and outstanding as of such date and to pay any unpaid charges thereon. Any unwithdrawn balance of the authorized amount of such advances shall automatically be cancelled on the same date. Section 2.03. Except as the Association shall otherwise agree, contracts for the purchase of goods or for civil works required for the Project shall be procured in accordance with the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1981 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.06. Service charges shall be payable semiannually on March 15 and September 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 15 and September 15 commencing March 15, 1988, and ending September 15, 2027, each installment to and including the installment payable on September 15, 1997, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment there- after to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Condi- tions. ARTICLE III Execution of the Project Section 3.01. The Borrower shall carry out Parts A, B, E (ii), (iii), (iv) and G of the Project through the Ministry, Part - 5 - D through the BND and shall cause: (i) the Municipalities of Ouagadougou and Bobo-Dioulasso each to carry out their respective portions of Parts E (i) and (v), F and H of the Project; (ii) ONE to carry out Part C of the Project and (iii) FONASEN to carry out Part I thereof, all with due diligence and efficiency and in conformity with appropriate administrative, financial, architec- tural and public utility practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. Section 3.02. In order to assist in carrying out the Project, the Borrower shall employ or cause to be employed such consultants and technical assistants as shall be agreed between the Borrower and the Association and whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Associa- tion. Section 3.03. In order to oversee the implementation of the Project, other than for Parts C, E (i) and (v), F and H of the Borrower shall: (i) establish a Project Unit within the Department of Town Planning and Architecture of the Ministry, headed by a qualified and experienced Project Director and consisting of a civil engineer, a socio-economist, an accountant, an urban plan- ner, and an expert in savings and loans cooperatives and (ii) ensure that qualified counterparts are assigned to said unit. Section 3.04. In carrying out Part F of the Project, the Borrower shall cause each of the Municipalities to establish and maintain Municipal Housing Offices within their existing Bureaux Domaniaux and ensure that said Offices are headed by qualified and experienced persons acceptable to the Association and that they are adequately staffed. Section 3.05. For the purpose of overall coordination and supervision in carrying out the Project, the Borrower shall establish an interministerial coordination committee under the chairmanship of the Minister responsible for Town Planning and consisting of: the Minister of Finance or his representative, (Vice Chairman), the Director-General of the Interior, the Prefect of Ouagadougou, the Sub-Prefect of Bobo-Dioulasso, the Director of Town Planning, the Director-General of the National Water Office, the head of the Housing Offices of the Municipalities, the Direc- tor of the Department of Lands, the Director-General of the BND and the Director-General of FONASEN, as permanent members; which committee shall enlist the participation as appropriate of: -6- the Director of the Centre National de Perfectionnement des Artisans Ruraux, the Director of the Office de Promotion de 1'Entreprise Voltaique, the Prefect of Gaoua and a representative of the team responsible for monitoring and evaluating the Project. Section 3.06. (a) The Borrower shall: (i) relend to the Municipalities of Ouagadougou and Bobo-Dioulasso the equivalent of the amounts of the proceeds of the Credit withdrawn from the Credit Account under the Categories in which funds have been allocated to such Municipalities, respec- tively, with the exception of Categories 1 (B), 1 (D), 1 (E) (2) and (4), 2 (A) and 3 (A), as set forth in Schedule 1 to this Agreement, under Financing Agreements acceptable to the Association which shall provide inter alia that the sub-loans shall mature in seventeen years and bear interest of six percent (6%) per annum, with five years period of grace during which no interest will accrue; (ii) relend to ONE the equivalent of the proceeds of the Credit withdrawn under Categories 1 (B), and 3 (C) (3) set forth in such Schedule, under a Financing Agreement acceptable to the Association which shall provide inter alia that the sub-loan shall mature in twenty years and bear interest of six percent (6%) per annum, with three years period of grace during which no interest will accrue; and (iii) relend to FONASEN the Proceeds of the Credit with- drawn under Category 1 (D) and 3 (C) (4) set forth in such Schedule under a Financing Agreement acceptable to the Association which shall provide inter alia, that the sub-loan shall mature in twenty years and bear interest of six percent (6%) per annum, with three years of grace during which no interest will accrue. (b) The Borrower shall exercise its rights under the Financ- ing Agreements referred to in paragraph (a) above in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, - 7 - nor amend, abrogate or waive any of such Agreements or any pro- vision contained therein. (c) The Borrower shall, in addition to the proceeds of the Credit referred to in paragraph (a) (i) above, make available as grants to the Municipalities of Ouagadougou and of Bobo-Dioulasso additional proceeds of the Credit equivalent to the amounts with- drawn under Categories 1 (E) (2) and (4), 2 (A) and 3 (A), respec- tively, set forth in Schedule 1 to this Agreement. (d) The Borrower shall cause the Municipalities to deposit the funds recovered as described in Schedule 5 to this Agreement into interest-bearing accounts at the BND, to be known as Housing Development Funds and which shall be administered according to procedures satisfactory to the Association and utilized as speci- fied in paragraph 4 of such Schedule. Section 3.07. In carrying out Parts A, B and C of the Proj- ect, the Borrower shall: (a) ensure that final engineering designs and implementation arrangements are satisfactory to IDA; (b) make all necessary arrangements to grant legal title in the form of an Urban Occupancy Permit to beneficiaries under Parts A and B of the Project; (c) ensure that land under customary tenure arrangements be incorporated in the jurisdictions of the Municipalities once developed; and (d) ensure that the selection of households participating in the Project and plot allocations, including terms and conditions of plot transfers, are done in accordance with the guidelines set forth in Schedule 4 to this Agreement. Section 3.08. The Borrower shall make appropriate arrange- ments in consultation with the Association for the establishment of cost recovery mechanisms, as specified in Schedule 5 to this Agreement. Section 3.09. The Borrower shall ensure that the financial management expert employed pursuant to Section 3.02 of this Agree- ment shall commence implementation of Part H of the Project not later than June 1978 and shall furnish his recommendations for the Association to comment thereon not later than June 1979. -8- Section 3.10. The Borrower shall cause the infrastructure and community facilities included in Parts A, B, C, E (i), (ii), (iii) and (iv) and I of the Project to be maintained, operated, and staffed in conformity with appropriate administrative, engi- neering, public utility, public health and educational practices, as the case may be, and shall provide or cause to be provided, promptly as needed, the funds, facilities, services and other resources required for this purpose. Section 3.11. (a) The Borrower undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. (b) Except as the Association shall otherwise agree, all goods and services financed out of the proceeds of the Credit shall be used exclusively for the Project until its completion. Section 3.12. (a) The Borrower shall cause the Project Unit referred to in Section 3.03 of this Agreement and the Munici- palities to prepare quarterly reports on the progress of the Project for delivery and approval by the interministerial commit- tee referred to in Section 3.05 to this Agreement, and shall furnish to the Association, promptly upon their preparation, the plans, specifications, reports, contract documents and construc- tion and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) The Borrower: (i) shall maintain or cause to be main- tained records adequate to record the progress of the Project (including the cost thereof) and to identify the goods and ser- vices financed out of the proceeds of the Credit, and to disclose the use thereof in the Project; (ii) shall enable the Associa- tion's accredited representatives to visit the facilities and construction sites included in the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) shall furnish or cause to be furnished to the Association all such information as the Associa- tion shall reasonably request concerning the Project, the expen- diture of the proceeds of the Credit and the goods and services financed out of such proceeds. -9- Section 3.13. The Borrower shall take or cause to be taken all such action as shall be necessary to acquire as and when needed all such land and rights in respect of land as shall be required for the construction and operation of the facilities included in the Project. ARTICLE IV Other Covenants Section 4.01. (a) The Borrower shall cause ONE, FONASEN and the Municipalities as well as the Department of Town Planning and other departments or agencies of the Borrower responsible for carrying out any part of the Project to maintain separate records and accounts in respect of the Project. (b) The Borrower shall cause ONE, FONASEN and the Munici- palities to: (i) have the accounts referred to in paragraph (a) of this Section for each fiscal year audited, in accordance with sound auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of their financial statements for such year as so audited and (B) the report of such audits by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish to the Association such other information concerning such accounts and the audits thereof as the Association shall from time to time reasonably request. Section 4.02. The Borrower shall employ qualified and expe- rienced consultants on terms and conditions satisfactory to the Association to monitor and evaluate the progress made in the execution of the Project. ARTICLE V Effective Date; Termination Section 5.01. The following event is specified as an addi- tional condition to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that the Financing Agreements have been signed by the parties thereto. - 10 - Section 5.02. The following event is specified as an addi- tional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely that each of the Financing Agreements has been duly authorized or ratified by, and executed and delivered on behalf of each of the parties thereto and is legally binding upon each such party in accordance with its terms. Section 5.03. The date June 30, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The obligations of the Borrower under Article IV of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date twenty years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister of the Borrower at the time responsible for Finance is designated as representative of the Borrower for the purposes of Section 11.03 of the General Condi- tions. Section 6.02. The following addresses are specified for the purposes of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances Ouagadougou Upper Volta Cable address: Telex: MINIFINANCE MIFICOM Ouagadougou 5256 - 11 - For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) IN WITNESS WHEREOF, the parties thereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be f;igned in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF UPPER VOLTA By Is/ Telesphore Yaguibou Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ Roger Chaufournier Regional Vice President Western Africa - 12 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed 1. Civil Works for: A. On-site Works 80% (Upgrading and Sites and Ser- vices): (1) Ouagadougou 491,000 (2) Bobo-Diou- lasso 314,000 (3) Gaoua 16,000 B. Water Supply: 80% (1) Ouagadougou 341,000 (2) Bobo-Diou- lasso 65,000 C. Off Site Works: 80% (1) Ouagadougou 21,000 (2) Bobo-Diou- lasso 127,000 D. Zogona Gulley 694,000 80% E. Community Facili- 80% ties: (1) Ouagadougou Markets and Com- munity Centers 20,000 - 13 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (2) Schools and Clinics Reha- bilitation 60,000 (3) Bobo-Dioulasso Markets and Community Centers 10,000 (4) Schools and Clinics Reha- bilitation 40,000 F. Ouagadougou Depot 24,000 80% 2. Vehicles and Equipment for: A. Community Facili- 100% of foreign ties: expenditures or 90% of local expenditures Ouagadougou (1) Public Hygiene and Disinfec- tion 40,000 (2) Community Development Fund 60,000 Bobo-Dioulasso (3) Public Hygiene and Disin- fection 40,000 (4) Community Development Fund 40,000 - 14 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed B. Municipal 100% of foreign Assistance: expenditures or 90% of local expenditures (1) Ouagadougou 240,000 (2) Bobo-Diou- lasso 60,000 C. Project Unit 11,000 100% of foreign expenditures or 90% of local expenditures 3. Consultant Services for: A. Municipalities: 100% (1) Ouagadougou 440,000 (2) Bobo-Diou- lasso 400,000 B. Project Unit: 825,000 100% C. Final Engineering 100% and Supervision: (1) Ouagadougou 4,000 (2) Bobo-Diou- lasso 120,000 (3) ONE 109,000 (4) FONASEN 32,000 D. Monitoring/Eval- uation 111,000 90% - 15 - Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed 4. Operating Expenses: 75% A. Garbage Service Start-Up Costs (Municipality Ouagadougou) 40,000 B. Municipal Housing Office: 75% (1) Ouagadougou 75,000 (2) Bobo-Diou- lasso 75,000 C. Project Unit 95,000 75% 5. Home Construction and Improvement Loans: A. Ouagadougou 415,000 100% B. Bobo-Dioulasso 415,000 6. Refunding of Project 330,000 amount out- Preparation Advances standing at Effective Date 7. Unallocated 2,003,000 TOTAL 8,200,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than - 16 - the Borrower; provided, however, that if the currency of the Borrower is also that of another country from the territory of which goods or services are supplied, expenditures in such cur- rency for such goods or services shall be deemed to be "foreign expenditures"; and (b) the term "local expenditures" means expenditures for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for expendi- tures prior to the date of this Agreement. 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in paragraph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allo- cated to another Category and which in the opinion of the Associa- tion are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expenditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expendi- tures for such item shall be financed out of the proceeds of the Credit and the Association may, without in any way restricting or - 17 - limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reason- able opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 18 - SCHEDULE 2 Description of the Project The Project is part of the Borrower's program for urban development and consists of the following Parts: A. Construction of drainage systems, roads and preparation of surveyed plots in the existing neighborhoods of Cissin (about 200 hectares) and Zogona (about 100 hectares) in Ouagadougou, and Sonsuribugu (about 132 hectares) in Bobo- Dioulasso, amounting to a total of about 9,400 plots. B. Development of (i) about 1,126 new plots covering an area of approximately 50 hectares in Bobo-Dioulasso and (ii) a pilot sites and services area for about 100 families in Gaoua. C. Extension of existing water distribution system to neighbor- hoods referred to in Parts A and B above as well as to the neighborhoods of Tampouy, Tanghin - Sambin and Hambdallaye in Ouagadougou. D. Provision by BND on behalf of the Borrower of loans for housing improvements and start up construction in the areas serviced under Parts A and B (i) of the Project. E. Provision of social services and community facilities con- sisting of the following components: (i) Repair and rehabilitation, including fencing and the construction of latrines, of about forty schools and ten dispensaries in Ouagadougou and twenty-five schools and seven dispensaries in Bobo-Dioulasso; (ii) Construction and furnishing and equipping of a total of nineteen community centers in the areas included in Parts A and B (i) of the Project; (iii) Construction of four markets in Ouagadougou and two mar- kets in Bobo-Dioulasso each covered and with a surface of about 350 square meters and containing 100 box stalls; - 19 - (iv) Carrying out of pilot projects in community development including small-scale operations in community educa- tion, public health, and women's activities, which will be identified during Project implementation; and (v) Procurement of insecticides, spraying pumps and a light truck for each of the Municipalities. F* Procurement of equipment, supplies and vehicles for the Municipalities to improve their sanitation and maintenance services, revenue collection, and implementation of housing operations, utilizing the services of technical assistants; repair and expansion of the municipal garage and depot of Ouagadougou. G. Training of staff in the Town-Planning Department of the Ministry and in the Municipalities. H. A review by consultants of procedures for revenue collection and of actual and potential sources of revenue in the Muni- cipalities. i. Reconstruction of the Zogona drainage gulley, including the reinforcement of three bridges. The Project is expected to be completed by June 30, 1981. - 20 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B and C hereof, contracts for the purchase of goods, equipment and civil works shall be procured in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. Contracts for goods and civil works shall, wherever possible, be grouped in packages of at least $50,000 equivalent each. 3. Bidders for civil works other than those described in para- graph B.2 and C below will be prequalified as described in para- graph 1.3 of Part A of the Guidelines. B. Other Procurement Procedures 1. Civil works contracts for construction of workshops, offices and drainage and water supply facilities and for plot surveys estimated to cost less than $50,000 equivalent and which cannot be grouped as per provision in paragraph A. 2 above may be let after competitive bidding in accordance with the Borrower's procurement procedures. 2. All contracts for equipment estimated to cost less than $5,000 equivalent and which cannot be grouped may be let by comparative shopping and negotiations in acrordance with the Borrower's procurement procedures. C. Procurement Without Contracting All works for secondary drainage and road construction under the Project may be executed by use of force account by the Ministry, or by following the procedures set forth in paragraph B.1 above. - 21 - D. Evaluation and Comparison of Bids for Civil Works; Preference for Domestic Contractors With respect to any contract for civil works included under Category 1 of the Table set forth in Schedule 1 to the Credit Agreement and to be procured in accordance with the procedures described in Part A.1 of this Schedule, the Borrower may grant a margin of preference of 7-1/2% to domestic contractors, in accordance with, and subject to, the following provisions: (a) Contractors shall be required to prequalify as provided in Part A of this Schedule and applicants for qualification apply- ing also for such preference shall be asked to provide, as part of the data for qualification, such information, including details of ownership, as shall be required to determine whether, accord- ing to the classification established by the Borrower and accepted by the Association, a particular firm or group of firms qualifies for a domestic preference. The bidding documents shall clearly indicate the preference and the method that will be followed in the evaluation and comparison of bids to give effect to such preference. (b) After bids have been received and reviewed by the Borrower, responsive bids will be classified into the following groups: (i) bids offered by domestic contractors eligible for preference; and (ii) bids offered by other contractors. For the purpose of evaluation and comparison of bids an amount equal to 7-1/2% of the bid amount shall be added to bids received under group (ii) above. E. Review of Procurement Decisions by the Association 1. Review of prequalification. The Borrower shall, before quali- fication is invited, inform the Association in detail of the pro- cedure to be followed, and shall introduce such modifications in said procedure as the Association shall reasonably request. The list of prequalified bidders, together with a statement of their qualifications and, where applicable, of their eligibility for domestic preference under Part D.1 above and of the reasons for the exclusion of any applicant for prequalification and for such - 22 - eligibility shall be furnished by the Borrower to the Association for its comments before the applicants are notified of the Bor- rower's decision, and the Borrower shall make such additions to, deletions from, or modifications in, the said list as the Associa- tion shall reasonably request. 2. Review of invitations to bid and of proposed awards and final contracts: With respect to all contracts for vehicles and equipment estimated to cost the equivalent of $50,000 or more and to all contracts for civil works: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invitations to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in suf- ficient time for its review, a detailed report, by the consultants referred to in Section 3.02 of this Agreement, on the evaluation and comparison of the bids received, together with the recommenda- tions for award of the said consultants and such other information as the Association shall reasonably request. The Association shall, if it determines that the intended award would be incon- sistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked or prequalification invited. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. - 23 - 3. With respect to each contract to be financed out of the pro- ceeds of the Credit and not governed by the preceding paragraph, the Borrower shall furnish to the Association, promptly after its execution and prior to the delivery to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 24 - SCHEDULE 4 Plot Allocation 1. Information concerning availability of plots, terms of occu- pancy and obligations of plot holders will be disseminated through mass media and other appropriate means by the Municipal Housing Offices of the Municipalities. 2. Residents of neighborhoods included in the Project wishing to acquire plots as well as candidates for new plots created by densification and in the site and service area will furnish applications to the Municipal Housing Offices according to pro- cedures established and made public by these Offices. 3. Allocation criteria for new plots will be established by the Project Unit created in the Ministry and the Municipal Housing Offices, using the allocation criteria applied in the Cissin proj- ect and the following as guidelines: (i) average monthly household income ceiling will be CFAF 40,000; (ii) applicants should not have an Urban Occupancy Permit in the respective Municipalities; (iii) priority for allocation will be given to resi- dents displaced because of upgrading operations; and (iv) the number of plots held by residents who do not hold customary land tenure should represent at least 90% of the plots in a project neighborhood. 4. These criteria will be modified as deemed appropriate in consultation with the Association, according to the results of the socio-economic surveys to be carried out in the Project neighborhoods. Allottees deemed eligible according to the estab- lished criteria will be allocated specific lots through a public lottery system. - 25 - SCHEDULE 5 Principles to be Applied for Recovery of Investment Costs of Project Components 1. On-Site Infrastructure. A system of recovery of the costs of the Project based on the allocation of costs set forth below will be applied by the Municipal Housing Offices to all households living in the neighborhoods to be upgraded and in the sites and services areas. These charges will include the following: (a) plot development costs, including contingencies, engi- neering, construction supervision, and relocation costs for displaced residents; (b) land acouisition charges, according to previous tenure status, with residents having customary tenure (origi- naires) paying CFAF 10/m2, and all the other residents paying CFAF 100/m2; (c) management charges of CFAF 100 per plot per month; and (d) default provisions, at 20% of the total monthly charge. 2. Total development costs for each site as outlined in 1 (a) above (with the exception of water-supply costs, treated in paragraph 6 below) will be divided by the net residential area to obtain a unit cost per square meter. Development cost per plot will then be established by multiplying the unit cost per square meter by the size of plot, which will be either 240, 300 or 360m2, with the overall average plot size fixed at 300m2. Plot development costs, together with land acquisition charges, will constitute a total plot cost, which will be repaid through a downpayment of CFAF 15,000, with the reiainder paid in install- ments over 10 years with a rate of interest of 8.5% per annum with no penalty for early repayment. These installments will also include management and default surcharges, as described in 1 (c) and 1 (d) above. 3. The only exception to the above will be made for residents having customary tenure (originaires), who will make only a one- time payment of CFAF 15,000. The difference between total plot costs for such residents and their payments of CFAF 15,000, will - 26 - be added to the plot costs for other residents on a proportionate basis by size of plot. The actual frequency of installments and the method of payment may vary according to the source of income of the plot holder. Charges for salaried plot holders will be deducted from salaries at the source. 4. The administration of the recovery system described in the preceding paragraphs will be subject to consultation with the Association. All payments will be made to the Municipal Housing Offices and will be deposited in the Housing Development Funds to be used to cover their administrative costs, defaults of up to 20% of the amounts receivable and debt-servicing of loans contracted for on-site investments. 5. Off-Site Infrastructure. The cost of off-site infrastructure, with the exceptions of water supply and off-site drainage works in the Zogona gulley, will be recovered through the general tax revenues of the Municipalities, which will be responsible for servicing the debt contracted for these investments. This system will cover the full cost of off-site infrastructure, including detailed engineering and construction supervision. 6. Water Supply. The cost of investments in the water supply distribution systems of the Municipalities will be recovered by ONE through the collection of water charges. 7. Drainage of the Zogona Gulley. One quarter of the costs of investments in the drainage of the Zogona Gulley will be consid- ered non-recoverable as a public sanitation measure. Three quar- ters will be recovered as follows: Half of the total investment costs will be recovered through tax revenue accruing to the FONASEN from sources agreed upon by the Borrower and the Associ- ation, and one-fourth of the total investment costs will be recovered directly from beneficiaries living on the 500 hectares in the Zogona flood plain. 8. Housing Construction and Improvements Loans. Loans for the purchase of building materials will be granted to the plotholders occupying plots under this Project. Existing residents will be eligible to borrow up to CFAF 30,000, while new residents will be eligible to borrow up to CFAF 65,000. Households which have been displaced as a result of upgrading operations and relocated on nearby plots will be eligible to receive CFAF 65,000 but will repay only CFAF 30,000, with the remaining CFAF 35,000 considered as compensation for relocation. - 27 - 9. Repayments of housing construction and improvement loans will be made to the Municipal Housing Offices at the same time as plot development charges and on the same terms and conditions. The Municipalities will deposit the revenue from repayments in the Housing Development Funds referred to Section 3.06 (d) of this agreement. 10. Community Facilities: (a) Markets. The cost of construction of new markets will be recovered through the Municipal tax on concessionaires and this tax will be increased as necessary to cover maintenance and operating expenditures; (b) Pilot Community Development Project. A portion of the costs of the pilot community development project, Part E (iv) (f the Project, will be recovered from benefi- ciaries, according to the nature of the pilot activities identified during the execution of the Project. 11. Municipal Assistance. The costs of Part F of the Project, with the exception of the cost of technical assistance, will be recovered through the general revenues of the Municipalities.